Is it necessary to have clothing/armor converted for use with body mods, what are the issues if I don't?

Thank you for your help.

Well using clothing thats not designed for a particular body mod, if there's any skin showing its going to be looking funny.

And the fact that the clothing won't conform to the shape of the new body unless they were made to fit it.

But say a full body costume or armer, and it shouldn't really be a problem at all!

There are some body mods that are compatible with each other (such as Type 3 and Type V) but yes, you generally need a full armor replacer as well. I know Type V comes with one.